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2 Nov, 2020 18:03

Coining it in through Covid: The well-connected companies who’ve made a mint thanks to the pandemic

Coining it in through Covid: The well-connected companies who’ve made a mint thanks to the pandemic

In the UK, government contracts worth millions of pounds have been awarded to companies without competitive bidding during the pandemic. Close scrutiny reveals many of the firms have close links to leading figures in Whitehall.

The Covid-19 pandemic has meant a miserable year for businesses of every size in every industry the world over. 

However, shortfalls in vital Personal Protective Equipment (PPE) meant the UK government splurged well in excess of £5 billion on PPE procurement contracts from March to October this year, and in the process a number of private companies profited handsomely. With a ‘second wave’ of the pandemic now well under way in the UK and elsewhere, this lavish spending seems unlikely for the foreseeable future to peter out.

The shortfalls, and resultant mad dash to make up the numbers, stem at least in part from London’s rejection of an offer from the European Union to join a PPE-procurement sharing scheme, under which member states pool their resources to purchase high-quality equipment in bulk at competitive prices for use throughout the bloc. Nonetheless, Whitehall has taken advantage of EU rules introduced during the pandemic to award contracts for the supply of PPE, among other goods and services, to private businesses, without competition. 

Under the terms of the directive, enacted on April 1, the EU’s “public procurement framework for the purchase of the supplies, services, and works needed to address the crisis” was updated to “substantially reduce” delivery deadlines by “[accelerating] open or restricted procedures.” Practically, this means in cases of “extreme urgency,” governments do not need to offer up contracts for competitive bidding.

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Numerous UK government bodies, including the Department of Health and Social Care, and local NHS bodies, have thus directly approached firms to provide particular services, bypassing tendering processes outright. In many cases, the beneficiaries have no clear professional history or expertise in the relevant field - but do have intimate ties to the Conservative Party and/or Boris Johnson’s government.

For instance, in April, small investment firm Ayanda Capital, which offers wealth management and maximization services for extremely rich families, was awarded a £252-million contract to supply masks to the NHS, the largest awarded during the pandemic to date.

The firm has no history of producing PPE, which may account for why up to 50 million masks purchased from Ayanda at a cost of £177 million cannot be used by the NHS, as they don’t meet safety standards.

The deal was brokered by Andrew Mills, an adviser to the UK Department of International Trade, and a senior board adviser to Ayanda – references to his board role were removed from the gov.uk website when the Good Law Project called public attention to this obvious conflict of interest. 

Adding to the controversy, after the Good Law Project lodged legal challenges with the government over the deal, ministers revealed the contract was originally going to be awarded to the company Prospermill Limited – set up in February 2019 by Mills and his wife. 

It has never filed accounts and boasts assets of just £100, having never apparently traded. Despite this, Prospermill was on the verge of winning the £252 million contract, on the somewhat implausible basis the company had “secured exclusive rights to the full production capacity of a large factory in China.”

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The deal, ministers claim, only fell through because the company didn’t have “established international banking infrastructure that could be used to effect the necessary payments overseas.” Nonetheless, Byline Times has suggested Mills may have made up to £50 million from the deal. Ayanda Capital denies any wrongdoing, and rejects the notion the masks it supplied to the NHS don’t meet safety standards.

Also in April, it was revealed Clipper Logistics had won a variety of contracts worth millions, which included a deal to establish an NHS PPE supply chain, and another to develop online portals allowing GP surgeries, small care homes and home care providers to place PPE orders through a dedicated website, which Clipper itself then fulfils via Royal Mail. The announcement followed weeks in which the NHS suffered significant supply shortages, several frontline workers died due to not having access to PPE, and allegations NHS staff were warned by superiors not to speak out about paucities of vital equipment abounded.

Clipper Logistics’ founder and executive chair is Steven Parkin, who has donated £725,000 to the Conservatives since 2016, and is executive chair of the Conservative Party Leader’s Group. It’s the Conservatives’ “premier supporter group,” with members joining the leader and other senior figures “at dinners, post-PMQ lunches, drinks receptions, election result events and important campaign launches.

In a grimly ironic twist, in March the company came under fire for failing to implement adequate coronavirus safety measures at its various hubs, with workers “crammed into corridors” and given no hand sanitiser, despite hundreds of staff having to sign into work using the same fingerprint scanner. Moreover, measures put in place when the sites were visited by police or external regulatory bodies were not maintained after they’d left, with management “applying unnecessary pressure” to employees to “breach social distancing” so staff would meet stock picking targets.

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That same month, P14 Medical was given two contracts worth in excess of £120.2 million to supply ‘face shields.’ The company actually does specifically manufacture medical and dental instruments, although it only has a staff of 10, and had £145 cash in the bank at the time of the contracts’ award, having posted a loss of £485,000 in 2019. Its founder and chief Steve Dechan is also a Conservative councillor in Gloucestershire .

He dismisses suggestions the contracts were awarded because of his links to the Conservatives, and claims the government has been “delighted” with the 120 million face shields the company has delivered so far.

The next month, Meller Designs was awarded two contracts, including a £65.8-million deal for face masks, and a £1.1 million contract for hand sanitiser. In June, it reaped two further contracts to supply more of both products, £79.2 million for face masks and £2.6 million for hand sanitiser.

Meller Designs typically supplies home and beauty products to high-street retailers, including Marks & Spencer. Its founder David Meller has donated nearly £60,000 to Conservative politicians, and the party, since 2009, giving £3,250 to current Minister for the Cabinet Office Michael Gove’s failed 2016 leadership campaign.

Globus (Shetland) Limited won a £93.8 million contract in July for the supply of respirators, a sum in excess of the company’s total revenue in the previous two years combined. The firm specialises in the manufacture of PPE for medical purposes, including respirators, and has operated in the field for 25 years. It has donated £365,000 to the Conservatives since 2016, including £150,000 in 2019 alone.

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It’s not merely in the field of PPE that Conservative party connections appear to have granted contractors a competitive edge in recent months.

Throughout the pandemic, artificial intelligence firm Faculty, which was hired by the Prime Minister’s chief adviser Dominic Cummings to work on the Vote Leave campaign in the 2016 Brexit referendum, is assisting Whitehall’s response to the ongoing crisis via data modelling. Since 2018, it has been awarded 14 government contracts, worth around £3 million. 

Former Faculty staffer Ben Warner worked with Cummings on Vote Leave, ran data modelling for the Conservatives’ 2019 election campaign, and is now a senior Downing Street adviser. His brother Marc is Faculty’s cofounder and chief executive.

In August, it was revealed digital communications agency Topham Guerin received £3 million to work on Covid-19 messaging, without competitive tender. The company ran the Conservatives’ highly controversial digital campaign during the 2019 general election, during which, among other stunts, the party’s official Twitter account was renamed “factcheckUK” during the leaders’ debate, and a critical website was launched masquerading as Labour’s manifesto. The contract was granted on March 17, just as the UK was heading into lockdown.

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In September, it was revealed PR firm Hanbury Strategy, co-founded by Paul Stephenson, had been given two government tenders without competition. Stephenson worked alongside Cummings as director of communications for the 2016 Vote Leave campaign, and was reportedly one of the first individuals appointed by Cummings. Hanbury’s other founder, Ameet Gill, was former Prime Minister David Cameron’s director of strategy in Downing Street. Under the terms of the deal, Hanbury reaped in excess of £580,000 over seven months for researching “public attitudes and behaviours” related to the pandemic.

The contracts’ existence wasn’t publicised by the Cabinet Office, only being revealed due to freedom of information requests – despite official guidelines stating it should have been disclosed within 30 days of signing.

Ironically, in March 2019 Cummings slammed the UK government procurement system, for being “complex, slow and wasteful,” “hugely favouring large established companies with powerful political connections – true corporate looters.”

The likes of Carillion and lawyers love it because they gain from the complexity, delays, and waste. It is horrific for SMEs to navigate and few can afford even to try to participate…Because of mangled incentives and reinforcing culture, the senior civil service does not care about this and does not try to improve. Total failure is totally irrelevant to the senior civil service and is absolutely no reason to change behaviour even if it means thousands of people killed and many billions wasted…The closed and dysfunctional Whitehall system fights to stay closed and dysfunctional,” he raged on his blog.

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